TL;DR. The PIIA is the single most important IP document your startup will ever execute. Every employee, founder, contractor, intern, and advisor must sign one before doing any work. Its job is to make sure that everything they create for the company becomes the company’s property — by operation of the agreement, in the present tense, without any further paperwork.
This post is part of the Montague Entrepreneur Forms Library — a free, plain-English collection of the legal documents every startup needs between its first day and its Series A. Pillar: Protect the IP.
What this document actually does
A software startup is, legally, a pile of intellectual property plus the people who created it. The PIIA is the contract that makes sure the IP actually ends up owned by the company and not by the people. It does four things: (1) it assigns, in the present tense, all work-product IP to the company; (2) it obligates the worker to disclose any prior inventions they want excluded; (3) it imposes a confidentiality obligation covering the company’s trade secrets and proprietary information; and (4) it adds a non-solicitation covenant and a post-termination cooperation obligation. Every employee, founder, contractor, intern, and advisor must sign one — and they must sign it before they start work, not after.
When you’ll encounter it
Every time you hire someone. Every time a contractor starts on a project. Every time a founder formally joins the company. The PIIA travels with the offer letter and must be executed on or before the first day of work. Delaying the PIIA — even by a week — creates a gap during which the worker may argue that whatever they created during that gap is still theirs, and Series A diligence will surface the gap like a missing tooth in a smile.
The narrative — Stanford v. Roche, and why present-tense assignment matters
The PIIA has to use the exact phrase "I hereby assign" — not "I agree to assign." The distinction seems pedantic. It isn’t. In Stanford v. Roche, the Supreme Court held that a mere agreement to assign IP in the future does not actually transfer title until a further assignment document is executed. A present-tense assignment, on the other hand, operates the moment the IP comes into existence — no further paperwork required. Every well-drafted PIIA uses the present tense. Every poorly-drafted PIIA doesn’t, and creates an ambush waiting to be sprung during diligence.
— Montague Law, Entrepreneur Forms Library
The levers
Lever 1 — Present-tense assignment
"I hereby assign" — these are the magic words. Without them, you’re relying on a future promise, and the Supreme Court has already told you that future promises don’t transfer title.
Lever 2 — Prior inventions schedule
The worker lists, on an exhibit to the PIIA, any IP they created before joining the company that they want to exclude from the assignment. This is the worker’s protection against having their prior work sucked into the company’s IP pool. If the worker doesn’t fill this out, the default is that everything is company IP.
Lever 3 — State-law carve-outs
California Labor Code § 2870 — and similar statutes in Washington, Minnesota, Utah, Illinois, Delaware, North Carolina, and Kansas — require employers to carve out inventions that the worker created entirely on their own time, without using company resources, and that don’t relate to the company’s business. A PIIA missing this carve-out is unenforceable in those states as to that subset of inventions. Big-law PIIAs always include the carve-out language.
Lever 4 — Non-solicitation
The PIIA usually includes a 12-month non-solicitation of employees and customers. This is enforceable almost everywhere. A non-compete, by contrast, is often not enforceable (especially in California, and increasingly nationally), and should be handled separately in an Executive Employment Agreement where appropriate — not buried in the PIIA.
The language that matters
I hereby assign and agree to assign to the Company all right, title, and interest in and to any and all Inventions that I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of my employment with the Company.
Read those first four words again: I hereby assign. This is a present-tense assignment that operates automatically as each new invention comes into existence during the worker’s tenure. The phrase "and agree to assign" is belt-and-suspenders — if for any reason the present-tense assignment doesn’t attach to a particular invention, the worker still has a contractual obligation to execute further paperwork to complete the assignment.
Traps for the unwary
- Signing the PIIA after work begins. Any work done before the PIIA is signed creates a gap. Sign first, work second.
- Using "I agree to assign" instead of "I hereby assign." The Stanford v. Roche trap.
- Forgetting the California § 2870 carve-out (or the equivalent in other carve-out states). Without it, the relevant provisions are unenforceable and the company’s IP position weakens.
- Letting a contractor start without a PIIA. Contractors are not employees, and the "work made for hire" doctrine does not automatically transfer IP to the company for independent contractors. The PIIA (or a standalone IP assignment) is what makes it work.
- Not keeping executed copies. At Series A the investors’ counsel will ask for signed PIIAs for every person who has ever worked on the product. Keep them organized from day one.
How this fits into the founder journey
The PIIA is the third of three documents every founder signs on day one (the others are the RSPA and, eventually, their offer letter if they’re also an employee). It’s also the document every subsequent hire signs before their first day. Getting this right is the single most impactful thing you can do to protect your IP position — and it costs you nothing but the discipline to paper it correctly every time.
Get this reviewed by Montague Law
Working on a deal? Montague Law drafts, reviews, and customizes startup legal documents on a flat fee designed for founders — not at the hourly rates of the big firms whose work product this library is designed to match. If you want this form tailored to your company, or a second set of eyes before you sign, email John.
This post is for general information only and is not legal advice. No attorney-client relationship is formed by reading it. If you’re about to sign something that matters, talk to a lawyer — preferably one who’s seen at least a hundred of these.